Peter Witts, CPA PC

10/29/2026

If your SBIR/STTR financial records were reviewed today, would you be ready to support the costs charged to your award?

A financial desk review can be an important part of federal award oversight. Unlike an on-site audit, a desk review generally involves examining financial records, accounting reports, and supporting documentation remotely.

For SBIR/STTR companies, preparation shouldn't begin only when a request for documents arrives.

Maintaining accurate, organized, and consistent financial records throughout the award can make the review process much more manageable.

In our latest article, we discuss important areas to prepare for an SBIR/STTR financial desk review, including:

✔ Reviewing award terms, approved budgets, and financial reporting requirements
✔ Reconciling project expenditures with the general ledger
✔ Organizing payroll, labor distribution, and timekeeping records
✔ Maintaining documentation for direct and indirect costs
✔ Reviewing consultant, subcontractor, and vendor expenses
✔ Reconciling invoices, reimbursements, and grant drawdowns
✔ Ensuring financial reports align with supporting accounting records
✔ Identifying and addressing documentation gaps before a review

Financial review readiness isn't just about having the right documents. It's about being able to clearly demonstrate how federal funds were spent and why those costs were charged to the award.

A consistent approach to recordkeeping, reconciliations, and internal financial reviews can help SBIR/STTR companies respond more efficiently to documentation requests, identify potential issues early, and strengthen overall award management.

The best time to prepare for a financial desk review is long before one is scheduled.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-prepare-for-an-sbir-sttr-financial-desk-review

10/28/2026

Found an error in your SBIR/STTR payroll or labor charges? Correcting it properly is just as important as identifying the mistake.

For federally funded companies, accurate labor charging is a critical part of maintaining compliant accounting records.

Mistakes can happen. An employee's time may be charged to the wrong project, labor costs may be allocated incorrectly, or payroll records may not align with the hours reported in the timekeeping system.

But making adjustments without proper review and documentation can create additional compliance concerns.

In our latest article, we discuss important considerations for correcting SBIR/STTR labor charges, including:

✔ Identifying discrepancies between timekeeping, payroll, and project accounting records
✔ Reviewing the original labor charges to understand what went wrong
✔ Ensuring corrections reflect the work actually performed
✔ Documenting the reason for each adjustment
✔ Maintaining appropriate review and approval procedures
✔ Preserving a clear audit trail of original entries and corrections
✔ Reconciling corrected labor costs with payroll and project reports
✔ Strengthening internal controls to help prevent recurring errors

The goal isn't simply to make the numbers match. It's to ensure that every labor charge accurately reflects the work performed and can be supported by reliable documentation.

For SBIR/STTR companies, a consistent process for identifying, reviewing, and correcting labor charges can help strengthen financial reporting, improve cost accuracy, and reduce potential compliance risks.

Addressing errors promptly and maintaining a clear record of corrections are important parts of responsible federal award management.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-payroll-corrections--how-to-fix-labor-charges-without-creating-compliance-problems

Payroll mistakes can happen even in companies with established accounting procedures. An employee may select the wrong project code on a timesheet. A payroll adjustment may not flow into the labor...

10/26/2026

Your SBIR/STTR award may be ending, but your financial responsibilities don't necessarily end with it.

For many federally funded companies, completing an SBIR/STTR project marks an important transition; from federally supported research toward commercialization and business growth.

However, moving into commercialization doesn't mean the financial records associated with the award can simply be closed and forgotten.

Award closeout and commercialization involve different financial priorities, and understanding that distinction is important for maintaining compliance while preparing for the next stage of growth.

In our latest article, we discuss key financial considerations, including:

✔ Reconciling final award expenditures and remaining balances
✔ Organizing payroll, labor distribution, and timekeeping records
✔ Reviewing subcontractor, consultant, and vendor costs
✔ Maintaining documentation supporting indirect cost allocations
✔ Reconciling final invoices, drawdowns, and financial reports
✔ Understanding applicable record retention requirements
✔ Separating federally funded R&D costs from commercialization expenses
✔ Maintaining financial visibility as the company transitions beyond the award

Completing an SBIR/STTR award doesn't erase the responsibility to support how federal funds were used.

Strong financial records help companies demonstrate accountability for completed awards while creating a clearer financial foundation for commercialization, future funding opportunities, and continued business growth.

The transition from research to commercialization is an exciting milestone. Making sure your accounting records are complete, organized, and supportable is an important part of moving forward with confidence.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-closeout-vs--commercialization--what-financial-records-still-matter-after-the-award

Completing an SBIR/STTR award is an important milestone for a growing technology company. The research may be finished. The prototype may have been validated. The final technical deliverables may...

10/21/2026

Need more time to complete your SBIR/STTR project? A no-cost extension may give you additional time; but it doesn't mean additional funding.

For SBIR/STTR companies, research delays, staffing changes, technical challenges, or unexpected project developments can sometimes make it difficult to complete the work within the original award period.

A no-cost extension may allow additional time to complete approved project activities, subject to the award's terms and applicable agency requirements.

However, before requesting an extension, it's important to understand the financial position of the award and whether the remaining funds can realistically support the work that still needs to be completed.

In our latest article, we discuss important financial records SBIR/STTR awardees should review, including:

✔ Budget-to-actual reports and remaining award balances
✔ Payroll, labor distribution, and projected staffing costs
✔ Outstanding consultant and subcontractor commitments
✔ Unpaid invoices and anticipated project expenses
✔ Indirect costs and applicable rate calculations
✔ Grant drawdowns, reimbursements, and accounting reconciliations
✔ Supporting documentation for costs already charged to the award
✔ Cash flow projections for the proposed extension period

A no-cost extension provides additional time; not an increase in the approved funding amount.

Before moving forward, awardees should evaluate whether their remaining budget, financial commitments, and accounting records support the proposed extension period.

Taking the time to review these details can help organizations make better financial decisions, identify potential funding gaps, and maintain stronger oversight as the project continues.

Learn more about this topic: https://www.wittscpa.com/blogs/no-cost-extensions-for-sbir-sttr-awards--financial-records-to-review-first-o3Eo

Research and development rarely follow a perfectly predictable timeline. An SBIR/STTR company may encounter delays in prototype development, equipment procurement, laboratory testing, technical...

10/20/2026

Working with a subawardee on an SBIR/STTR project doesn't mean transferring all the financial responsibility to them.

For SBIR/STTR prime awardees, collaborating with universities, research institutions, and other organizations can bring valuable expertise to a federally funded project.

However, managing those relationships involves more than issuing a subaward agreement and processing invoices.

Prime awardees generally have responsibilities for overseeing subaward activities, monitoring financial performance, and maintaining appropriate documentation to support costs charged to the federal award.

In our latest article, we discuss important financial considerations for SBIR/STTR subaward monitoring, including:

✔ Establishing clear financial terms, budgets, and reporting expectations
✔ Reviewing subawardee invoices and supporting documentation
✔ Monitoring expenditures against approved subaward budgets
✔ Understanding allowable costs and applicable funding restrictions
✔ Tracking subaward payments and reconciling them with accounting records
✔ Maintaining appropriate financial oversight and internal controls
✔ Identifying potential discrepancies and addressing issues promptly
✔ Preparing documentation to support reporting, reviews, and audit readiness

Subaward monitoring isn't simply about making sure your research partners get paid. It's about maintaining financial accountability across the entire federally funded project.

A well-structured monitoring process can help prime awardees strengthen financial oversight, identify potential issues earlier, and maintain better visibility into how federal funds are being used by their research partners.

As SBIR/STTR projects grow in complexity, having clear procedures for managing subaward relationships becomes an increasingly important part of responsible award management.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-subaward-monitoring--financial-responsibilities-for-prime-awardees-AmyF

Winning an SBIR/STTR award often creates opportunities to collaborate with universities, research institutions, laboratories, and specialized technical partners. These partnerships can bring...

10/19/2026

Just because federal grant funds are available doesn't mean they're ready to be drawn.

For SBIR/STTR companies and other federal grant recipients, managing drawdowns requires more than monitoring the remaining award balance.

Funds must be requested in accordance with applicable award requirements, supported by appropriate financial records, and aligned with allowable expenditures and immediate cash needs.

Without proper oversight, companies risk drawing more funding than permitted or needed, creating reconciliation discrepancies, reporting complications, and potential compliance concerns.

In our latest article, we discuss practical steps federal awardees can take to reduce the risk of overdrawing grant funds, including:

✔ Understanding award-specific drawdown requirements and funding limitations
✔ Reviewing allowable project expenditures before requesting funds
✔ Reconciling drawdowns with accounting records and supporting documentation
✔ Monitoring spending against the approved award budget
✔ Coordinating payroll, vendor payments, and other project cash needs
✔ Establishing internal review and approval procedures for fund requests
✔ Identifying and correcting drawdown discrepancies promptly
✔ Maintaining accurate records for financial reporting and audit readiness

Managing federal funding responsibly isn't just about tracking how much money remains. It's about understanding when funds can be requested, what supports each drawdown, and how those amounts reconcile with actual award activity.

A consistent drawdown and reconciliation process can help federally funded businesses maintain stronger financial controls, improve cash management, and reduce compliance risks throughout the award lifecycle.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-avoid-overdrawing-federal-grant-funds-n6m7

Federal grant funds should not be treated like general operating cash. For SBIR/STTR awardees and other federally funded companies, drawdowns need to be tied to supported award costs, immediate...

10/16/2026

Receiving an SBIR/STTR award is a major milestone. But before project spending begins, is your accounting system ready to support it?

For federally funded startups, the transition from winning an award to managing it comes with important financial responsibilities.

Hiring employees, purchasing equipment, engaging consultants, and beginning research activities can happen quickly. Without the right accounting processes in place, companies may face cost classification issues, incomplete documentation, and reporting challenges later in the award.

A strong financial foundation should be established before the first project expense is recorded.

In our latest article, we discuss essential accounting steps SBIR/STTR companies should consider before spending begins, including:

✔ Reviewing award terms, funding limitations, and the approved budget
✔ Establishing project codes and award-specific cost tracking
✔ Setting up payroll and employee timekeeping procedures
✔ Separating direct, indirect, and unallowable costs
✔ Reviewing indirect rates and cost allocation methods
✔ Organizing consultant and subcontractor agreements
✔ Establishing invoicing or grant drawdown procedures
✔ Creating documentation and record retention processes
✔ Implementing budget-to-actual monitoring and regular reconciliations

Winning federal funding is one milestone. Building the financial infrastructure to manage it successfully is the next.

Taking these steps early can help SBIR/STTR companies maintain stronger financial controls, support compliance requirements, and focus on delivering the research and innovation their awards were intended to fund.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-award-setup-checklist--accounting-steps-to-take-before-spending-begins-z5my

Receiving an SBIR/STTR award is a major milestone. Months of proposal development, technical planning, and budget preparation have led to a funding opportunity that can move your innovation forward...

10/01/2026

You won the SBIR/STTR award. Before you start spending, is your accounting system ready?

The period between receiving an award and beginning project work is an important opportunity to establish the financial processes that will support the project from day one.

Waiting until expenses are already being incurred can lead to misclassified costs, incomplete documentation, timekeeping issues, and difficult reconciliations later.

In our latest article, we walk through important accounting steps SBIR/STTR companies should consider before award spending begins, including:

✔ Reviewing the award terms, approved budget, and period of performance
✔ Setting up project-level cost tracking in the accounting system
✔ Establishing timekeeping and labor distribution procedures
✔ Separating direct, indirect, and unallowable costs
✔ Confirming indirect rates and cost allocation methods
✔ Setting up payroll, consultant, and subcontractor tracking
✔ Establishing billing or drawdown procedures
✔ Organizing supporting documentation and record retention
✔ Creating a process for budget-to-actual monitoring and regular reconciliations

The first accounting decisions you make after receiving an award can affect how easily you manage that funding throughout the entire project.

Setting up the right processes before spending begins can give your team better financial visibility, stronger documentation, and a more reliable foundation for reporting, compliance, and future awards.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-award-setup-checklist--accounting-steps-to-take-before-spending-begins

Receiving an SBIR/STTR award notice is exciting. It means the company is moving from proposal planning to funded work. But before the first payroll run, vendor purchase, consultant invoice,...

09/30/2026

Being ready to pursue federal funding involves more than having a strong technical idea and a compelling proposal.

Your financial infrastructure needs to be ready, too.

For SBIR/STTR applicants, government contractors, and other organizations pursuing federal awards, a funding readiness assessment can help identify accounting and compliance gaps before they become problems during proposal review, pre-award evaluation, or award performance.

So, what should a thorough readiness assessment actually examine?

In our latest article, we discuss key areas to review, including:

✔ Accounting system structure and project-level cost tracking
✔ Timekeeping and labor distribution procedures
✔ Direct and indirect cost classification
✔ Indirect rate methodology and cost pools
✔ Identification of unallowable costs
✔ Financial policies and internal controls
✔ Budget and cost proposal readiness
✔ Billing, invoicing, and grant drawdown processes
✔ Supporting documentation and record retention
✔ Reporting and overall post-award preparedness

Federal funding readiness isn't just about whether you can win an award. It's about whether your organization is prepared to manage that funding responsibly once you receive it.

Identifying gaps early gives you time to strengthen your systems, processes, and documentation before the demands of an active federal award begin.

Learn more about this topic: https://www.wittscpa.com/blogs/what-a-federal-funding-readiness-assessment-should-include

Federal funding can create major growth opportunities for small businesses, research-driven startups, and SBIR/STTR applicants. But before pursuing or accepting a federal grant or contract, the...

09/29/2026

A financial policies and procedures manual shouldn’t be something you create just to check a compliance box. It should explain how your company actually manages federal funding.

For SBIR/STTR companies, documented procedures can help turn federal requirements into consistent day-to-day financial practicese; specially as the organization adds employees, consultants, subcontractors, and additional awards.

Your team should know how costs are classified, approved, recorded, supported, and ultimately charged to a federal project.

In our latest article, we discuss important areas an SBIR/STTR financial policies and procedures manual should address, including:

✔ Timekeeping and labor distribution
✔ Direct and indirect cost classification
✔ Identification and treatment of unallowable costs
✔ Purchasing and expense approval procedures
✔ Consultant and subcontractor costs
✔ Billing and federal fund drawdowns
✔ Financial reconciliations and reporting
✔ Supporting documentation and record retention
✔ Award closeout procedures

The value of a policies and procedures manual is not simply having one; it’s having documented processes that your organization actually follows.

As federal funding grows, clear procedures can help create consistency across the organization, strengthen internal controls, support better documentation, and provide a stronger foundation for managing future awards.

Learn more about this topic: https://www.wittscpa.com/blogs/what-should-be-in-an-sbir-sttr-financial-policies-and-procedures-manual-

An SBIR/STTR financial policies and procedures manual may sound like an administrative document. But for a federally funded company, it can be one of the most important tools for accounting system...